New Trends in Energy Management Disrupt the Facilities Management Industry in the GCC

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  • Energy Management: Future of FM

On the back of rapidly evolving technologies and digital revolution across multiple industries, Facilities Management (FM) companies are now starting to go through a significant transformation to catch up with the new demands in the marketplace. Competing in the industry and maintaining significance without following industry megatrends is no longer an option for FM providers with traditional service portfolios. Now, more than ever, it is essential for FM companies to advance towards integrating Workplace Management, Smart Technologies and Energy Management (EM) services into their offerings.

Energy Management is one of the fastest growing trends that is significantly disrupting the FM industry. Energy Management, a recent white paper from Frost & Sullivan’s Energy & Environment practice discusses the growing trends in EM, increasing demand for energy performance, forecasting of the contracting market in the GCC, growth opportunities, and more.

“Companies that are offering traditional FM services are now under high risk of losing their business with the pure energy service providers, said Ana Sukhishvili, Senior Consultant, Energy & Environment – Industrial Practice, Frost & Sullivan. “They need to explore opportunities to become Integrated FM providers that will enable them to compete with the pure energy players in the building energy management market.”

Highlighted below are some growth opportunities for the integrated FM service providers:

  • Become Energy Service Companies (ESCO) accredited FM service provider
  • Evaluate energy performance contracting business models and identify the suitable one
  • Establish partnerships with Super ESCOs and financial institutions

Integrated Facilities Management (IFM) companies have long realised the value-add of Energy Management (EM) services to their businesses, clients, and ultimately, the environment. EM’s value proposition goes far beyond just the benefits obtained through energy efficiency; it allows end users to access the EM data for better decision making, increased business productivity and successful performance contracting. While typical EM projects are predominantly delivered by Energy Service Companies (ESCOs), FM service providers are now beginning to build capabilities to compete with them comprehensively, thus acquiring ESCO accreditations globally.

Performance contracting for Facilities Management companies and ESCOs in the GCC remains in the early stages of development. This is attributable to restraints such as access to financing, incomplete regulatory environment, and an overall lack of awareness. However, creation of Super ESCOs in the UAE and the KSA, in 2013 and 2017, respectively, has significantly eliminated entry barriers, especially in the UAE (given the longer presence of Etihad ESCO in the market).

“A lot of developers and facility owners do not realize the importance of energy performance contracting. The question always is “How am I going to benefit from it?” and despite seeing the clear benefits of implementing energy efficiency measures, financing of the project becomes a challenge,” Sukhishvili noted.

Despite these challenges, there is a massive potential for Energy Management in the GCC. The as-built infrastructure that can benefit from retrofitting is significantly high, facilitated by being relatively new and adequately sophisticated.

FM companies play a vital role in this industry, and can derive significant gains as this market evolves. However, it requires comprehensive planning and research, for a FM company to prepare to operate in this industry. Managing longevity of contracts, a shift from a services model to an asset-heavy model, and requirements for highly trained manpower are all aspects that will demand a redefinition of the way that FM companies are used to operating.

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